If you have been declared Bankrupt it may not be too late to reverse the process. You might be able to overturn bankruptcy by proposing an IVA to your creditors.
- Is it possible to overturn Bankruptcy?
- Why would your creditors prefer an IVA to Bankruptcy?
- How to overturn Bankruptcy with an IVA
Want to overturn Bankruptcy with an IVA? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Is it possible to Overturn Bankruptcy?
Perhaps you have been forced to go Bankrupt by one of your creditors. Alternatively you may have completed an application without getting advice and now want to reverse the process.
This situation could have serious implications for you. In particular if you are a home owner with equity in your property or you are a director of a limited company.
In these circumstances it may be possible to annul or overturn bankruptcy. To do this you will either have to pay or settle the debt you owe with an acceptably large cash lump sum. Alternatively you can propose an IVA (Individual Voluntary Arrangement).
Your creditors may agree to an IVA and allow you to annul your bankruptcy if it means a greater percentage of their debt is likely to be repaid.
Why would your Creditors prefer an IVA to Bankruptcy?
Given that you do not have access to a cash lump sum the only way to overturn bankruptcy is to propose an IVA to your creditors. This involves repaying them as much as you can over a period of 5-6 years.
The offer of repayment you make through this Arrangement must be better than they are likely to get if you remain bankrupt. In these circumstances most reasonable creditors will consider the IVA option.
Your creditors may even accept an IVA if the amount you propose to pay is the same or less than your payments in Bankruptcy. This is because IVA fees are generally lower than bankruptcy. As a result they will end up with more overall.
If you want to overturn bankruptcy with an IVA you need to act before a Trustee is appointed. After this the Trustee also becomes a creditor. They could then choose to reject the the proposal.
How to Overturn Bankruptcy with an IVA
Step 1 – Get advice from an IVA Expert
The first thing you will need to do is get advice from one of our experts. If it is appropriate for you to apply for an IVA we will introduce you to a suitable Insolvency Practitioner (IP).
Step 2 – Get an Interim Order
Once your IP is appointed they will need to apply for an Interim Order on your behalf. This is a court order which will prevent the Official Receiver from taking any further action against you until your creditors have had the opportunity to consider your IVA proposal.
Step 3 – Produce an IVA proposal with your IP
After the court has granted the Interim Order your IP will work with you to produce your formal IVA proposal. This is a document summarising all of your financial circumstances, how much you owe and what you propose to pay back to your creditors.
Step 4 – Creditor’s meeting
After your IVA proposal has bee issued your creditors are given time (normally two weeks) to consider and accept it. As long as 75% of the value of your creditors who respond accept the proposal it becomes legally binding on them all.
Step 5 – IVA starts and Bankruptcy is annulled
Once your IVA is accepted you must immediately start paying into it according to its terms. At the same time your bankruptcy will be annulled and the official receiver will hand over all of their duties to your Insolvency Practitioner. You are then no longer a bankrupt person.
Arrange a call with an IVA Expert
Your information will be held in strictest confidence and used to contact you by our internal team only. We will never share your details with any third party without your permission.